5 Bankruptcy Myths


Myth #1 – I have to sell everything I own.

Reality – While bankruptcy may result in giving up some property, bankruptcy law provides for significant exemptions that allow the debtor to obtain a fresh start and follow through with the bankruptcy plan and get back on track.

Bankruptcy can help you stay in your house, keep your car, and hold on to the things that matter most to you.

Myth #2 – Bankruptcy is immoral.

Reality –Honest Abe is among the millions of Americans throughout history who restarted a financial life through bankruptcy. Abraham Lincoln invested in a partnership that ultimately led to enormous amounts of debt that he would never pay off. Bankruptcy allowed him to move on and begin life anew.

Certainly, bankruptcy may be abused by those without morals, but far more often bankruptcy can be just the start someone needs to get back on track.

Myth #3 – Bankruptcy is the lazy way out.

Reality – Sometimes we make mistakes. Sometimes life just happens to us. Sometimes in spite of all we do, our best efforts may not be enough. The current economic situation has left many families scraping just to get by, dodging creditors’ calls, and feeling overwhelmed by the weight of financial obligations hanging over them. Bankruptcy isn’t a lazy way out.

For many, it is the only way out of the debts that are plaguing them every day. Bankruptcy allows people to stop collection calls, get a stable financial environment in their homes, and begin pursuing dreams again. We have seen many clients who walked in the doors with heads hung low, walk out refreshed and excited, ready to tackle the world.

Myth #4 – I’ll never win a fight against the big banks.

Reality — Banks and other major creditors know the power of bankruptcy law. The attorney that knows the rights of his clients in regards to bankruptcy wields a powerful sword over such creditors. Banks know that a debtor in bankruptcy will likely mean losing money on the debt.

This useful tool allows a skilled practitioner to bring creditors to the table on any other issues that may arise. Although bankruptcy can be a complicated process, bankruptcy is one tool that levels the playing fields with major creditors.

Myth #5 – I’ll never be able to buy a house or car again.

Reality — The truth is that sometimes bankruptcy is the better choice for your financial future. Many people who are struggling to make payments, running up credit cards to their maximum limits, and picking which bill to pay are setting themselves in positions from which they may not ever recover.

Bankruptcy, however damaging to your credit, may be just the restart you need to get on time with payments, build credit responsibly through new lines, and make the change that will lead you into the track of good credit. A skilled practitioner will help you make the right decision of when to file.

–Authored by Charles B. Malolo, J.D., ©2011

The Law Offices of Taylor Willingham, PC (reposted with permission)


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